Huntington-Cleveland Requests Agency Action on Skyline Mine Permit

According to the request for agency action, “[t]he [a]ddition will allow Canyon Fuel to modify its mine plan to include Flat Canyon Federal Coal Lease Tract UTU-7714 as part of its existing Surface Mining Control and Reclamation Act permit.” Huntington-Cleveland says that its request for agency action was filed in order to seek “a hearing before the Board of Oil, Gas and Mining … on the Division’s approval of the Permit and the hydrologic and water conditions imposed by the Division,” as well as a request that “the Board modify the Permit,” or “remand the Permit back to the Division for further proceedings with Canyon Fuel and Huntington-Cleveland to develop sufficient conditions to minimize impacts to the hydrologic balance.”

Hearing Held to Determine Fate of Skyline Mine Permit

A hearing on the request for agency action took place on April 26, 2017 at 10:00 am. As set forth in the notice of hearing, the purpose of the hearing will be to address the request for an Order:

Modifying the Permit issued for the Flat Iron Addition to the Skyline Mine to require:

A) Automated continuous or daily monitoring of flows into Electric Lake and the connection of such monitoring sites to Emery County’s ExacTraq system consistent with the Loughlin Report’s recommendations; and B) Imposing conditions and limitations to require the discharge of water pumped from the mine to Electric Lake rather than Eccles Creek, except in emergencies and situations in which Electric Lake is at capacity; or

In the alternative, vacate the decision approving the Permit for the Flat Iron Addition, and remand the matter to the Division with instructions for the Division to work with Canyon Fuel and Huntington-Cleveland to develop sufficient conditions to minimize disturbances to hydrologic balance;

Making such findings and orders in connection with this Request as it deems necessary; and

Providing for such other and further relief as may be just and equitable under the circumstances.

Huntington-Cleveland Holds Senior Water Rights Dating Back to 1885

Huntington-Cleveland is the rightful holder of several state-appropriated water rights, including the most senior water right in the Huntington drainage, which dates back to 1885. Huntington-Cleveland states that it relies on its state-appropriated water rights “to provide water for its many shareholders, which include nearly all of the agricultural users in northern Emery County as well as the municipalities of Huntington, Cleveland, and Elmo for culinary drinking water.” Huntington-Cleveland says it also “provides water for PacifiCorp/Rocky Mountain Power, its largest shareholder, for the operation of the Huntington Power Plant, a major employer and economic driver in Emery County.”

According to Huntington-Cleveland, the water in the Huntington drainage is collected and stored in the Boulger Reservoir. The Boulger Reservoir is located within the Huntington drainage and the Flat Canyon Lease Addition for the Skyline Mine. The water is used to fulfill Huntington-Cleveland’s water rights appropriated by the state. Huntington-Cleveland says that other nearby reservoirs also supply water to Huntington Cleveland. “Huntington-Cleveland believes these water sources are hydrologically located to other water sources located within the [Flat Canyon Lease Addition for the Skyline Mine] and Huntington Creek.

Skyline Mine Begins Flooding in 2001

In August 2001, part of the Skyline Mine was unexpectedly flooded while mining operations were underway in the mine. Consequently, Electric Lake, which Huntington-Cleveland claims supplies it with water, began to drain. In response to the lake losing water, Huntington-Cleveland says Canyon Fuel and PacifiCorp, which own Electric Lake, drilled three separate wells in James Canyon for the purpose of pumping water into Electric Lake. Huntington-Cleveland says that of the three wells drilled, only one continues to pump water to this day, and that, between October 2015 and March 2016, the pump pumped nearly 13,700,000 gallons of water per day. In all, as of March 2016, Huntington-Cleveland believes that the pump has pumped some 79,000 acre-feet of water from the mine, and that the amount of water being pumped from the mine is only increasing over time.

Following the unexpected flooding of the Skyline Mine in 2001, certain tests were conducted to determine the source of the flooding. These tests revealed “(a) faults at the bottom of the lake adjacent to the mine workings; (b) bubbles from methane gas, a well-known feature of coal formations, emanating along the faults; and (c) sediment being sucked downward into the ground as the vehicle stirred up sediment at the bottom of the lake,” Huntington-Cleveland says. Various other studies that were completed at the same time revealed “substantial quantities of surface water in the vicinity of Electric Lake [that] were being diverted in the mine.” However, other studies reached differing conclusions, and, as a result, there is consensus regarding the source of the water that continues to flood the mine. Huntington-Cleveland worries that the mining of the Flat Canyon Lease Addition for the Skyline Mine will only increase flooding into the mine, which will run parallel to the western shore of the Electric Lake.

Canyon Fuel Seeks to Broaden its Mining Operations in 2015

In October 2015, Canyon Fuel filed an application to broaden its mining operations into the Flat Canyon Lease Addition for the Skyline Mine. In response, Huntington-Cleveland requested an informal conference to discuss the application, as well as its concerns that the “required sufficient hydrological protections to ensure that the expanded mining operations would not upset the hydrologic balance as required by Utah law and the Division’s regulations and impair its water rights.” Following an informal conference in July 2016, the division retained the services of Loughlin Water Associates, LLC to independently evaluate whether Canyon Fuel’s proposed monitoring was sufficient to detect the potential impact on water rights.

Loughlin ultimately determined that Canyon Fuel’s plan was not “adequate … to prevent impacts to … water rights and Electric Lake.” As a result, Loughlin recommend to the division that Canyon Fuel put in place additional monitoring and data protocols to detect the loss of water from Electric Lake.

Following Loughlin’s report, Canyon Fuel resubmitted its application to the division, which included several changes, but did not include a plan to monitor Huntington Creek or other significant sources of inflows into Electric Lake or Huntington Creek. Instead, Canyon Fuel’s plan relied on quarterly reporting. Huntington-Cleveland also says that Canyon Fuel’s monitoring plan as set forth in its application “relied on monitoring to address the potential water rights impacts of its trans-basin diversion of water pumped in the mine into the Price River Drainage, rather than including limitations or conditions on the out-of-basin discharge of this water.”

Canyon Fuel Issued Permit to Expand Mining Operations

In early February 2017, the division issued its approval of Canyon Fuel’s application and issued Canyon Fuel its permit to expand its mining operations into the Flat Canyon Lease Addition for the Skyline Mine. As set forth by Huntington-Cleveland in their request for agency action and hearing:

Although the Division included a condition that required Canyon Fuel to submit cumulative monthly flow data for discharges into Electric Lake and Eccles Creek, it did not require automated continuous or daily monitoring as Loughlin recommended. Most importantly, the Division also did not limit or condition the discharge of water pumped from the mine into the Price River Drainage.

Huntington-Cleveland Appeals

In response to the decision to issue the permit, Huntington-Cleveland filed its appeal and request for agency action and hearing. In its request, Huntington-Cleveland made several arguments regarding why the permit should be modified, or in the alternative, why the matter should be remanded back to the division for further proceedings. First, Huntington-Cleveland argued that the division erred by failing to require automated continuous or daily monitoring of the inflows into Electric Lake as recommended by Loughlin. According to Huntington-Cleveland, the division is authorized under its own rules and regulations to require the monitoring suggested by Loughlin. Huntington-Cleveland says the division’s “failure to exercise [its] authority and require conditions that its own independent expert recommended is arbitrary, capricious, and contrary to its obligation to minimize the impacts of Canyon Fuel’s coal mining activities to the hydrologic balance.”

Second, Huntington-Cleveland argued that the division failed to put in place sufficient protections as it relates to the trans-basin diversion of water from the Huntington Drainage into the Price River Drainage. In the eyes of Huntington-Cleveland, the division is “obligated by law to and should have imposed conditions that limit and regulate the amount of water discharged into Eccles Creek. More specifically, the Division should have required Canyon Fuel to discharge as much of the waters pumped from the mine as possible into Electric Lake, and allowed discharges to Eccles Creek only in emergencies or situations in which Electric Lake is at full capacity.”

Finally, Huntington-Cleveland argued that it is entitled to protections that minimize any impairment to its state-appropriated water rights. In its request, Huntington-Cleveland sets forth:

As the Loughlin Report notes, the closer proximity of the Addition to Electric Lake heightens the concerns of water right impairment and necessitates steps to expand the Application “to protect water rights and to show that no impacts to Electric Lake are occurring in the future.” Moreover, common sense and Utah law as discussed above dictates that one cannot divert millions of gallons of water a day and thousands of acre-feet per year from a closed basin without some impairment. Under Utah law it is the burden of the applicant to demonstrate otherwise. Therefore, the Division does not need to wait until Huntington-Cleveland has collected detailed flow measurements quantifying impairment to its water rights to enact the Loughlin Report’s recommendations regarding automated continuous or daily flow monitoring and to require conditions and restrictions on trans-basin diversions to minimize impacts to the hydrologic balance and Huntington-Cleveland’s water rights.

Mining Rights v. Water Rights

It will be interesting to see whether or not the Oil, Gas and Mining Board grants Huntington-Cleveland’s request to modify the permit it issued, or whether, in the alternative, the permit is remanded back to the division for further consideration. Furthermore, the dispute between the mine and Huntington-Cleveland will serve as a case study in mining rights v. water rights in the newly dawned Trump era. We will continue to follow this story, and will provide further updates as they become available.

As the U.S. Supreme Court pointed out some forty years ago in its opinion in Colorado River Water Conservation Dist. v. United States, “It is probable that no problem of the Southwest section of the Nation is more critical than that of scarcity of water.” The Supreme Court’s words still ring true today, as evidenced by the legal battle between the Agua Caliente Band of Cahuilla Indians and the Coachella Valley Water District over whether the tribe’s federally reserved water rights extend to groundwater. The case is now set to be decided by the Ninth Circuit Court of Appeals following a California district court’s decision that the Agua Caliente Indian tribe had a reserved right in groundwater underlying the tribe’s reservation.

Agua Caliente Sues Water District and Others in 2013 Over Groundwater Rights

In May 2013, the Agua Caliente tribe filed a complaint in federal court against the Coachella Valley Water District and several others seeking to have the court declare that the tribe has a federally reserved right to groundwater underlying the Coachella Valley, and to further enjoin the defendants from overdrafting the groundwater to the injury of the tribe. In their complaint, the Agua Caliente tribe claims that they have lived in the Coachella Valley since before California was admitted to the Union in 1850. The tribe sets forth that they have continually used both surface water and groundwater resources for “cultural, domestic and agricultural subsistence purposes,” including “stock watering and agricultural irrigation.”

Agua Caliente Says Their Water Rights are Senior to Those of the Defendants

Furthermore, the tribe claim that the “establishment of the Reservation pursuant to federal law impliedly reserved to the Tribe and its members the right to surface water and groundwater sufficient to accomplish the purposes of the reservation, including establishing a homeland for the Tribe and its members.” More specifically, the tribe claims their reserved rights “are the most senior” in the region, and, as a result, the tribe may prevent the defendants from adversely impacting the quantity and quality of their water.

Agua Caliente Tribe Claims of “Overdraft”

Beyond their claims of seniority, the Agua Caliente tribe alleges that the groundwater underlying the Coachella Valley is in a continual state of “overdraft,” meaning that the water flowing from the underground aquifer exceeds the water flowing into the aquifer. The defendants claim that they try to recharge the valley’s groundwater by importing water from the Colorado River. However, the tribe claims that water from the Colorado River is of inferior quality.

Lastly, the tribe alleges in its complaint that the “Tribe and its members have established a homeland in the Coachella valley, including housing, schools, government offices, and cultural and commercial enterprises,” for which the Tribe relies upon its reserved groundwater resources.” Accordingly, the tribe says it seeks relief in order to “satisfy the present and future needs of the Tribe and its members” and to protect the tribe’s reserved water rights from overdraft and degradation.

Parties Agree to Trifurcate Case

During the litigation of the case, the parties agreed to trifurcate the case into three phases. Phase I seeks to resolve the legal questions surrounding the Agua Caliente tribe’s federally reserved rights to groundwater under the Winters doctrine, as well as the tribe’s aboriginal rights to groundwater. The other two phases of the litigation are dependent upon a resolution of the tribe’s rights under Phase I. If the case ever proceeds to Phase III, the California district court will undertake the fact-intensive tasks of quantifying the Agua Caliente’s rights to groundwater and pore space, and crafting appropriate injunctive relief.

The Parties’ Cross-Motions for Summary Judgment

All four parties to the case filed motions for summary judgment. In their motion, the tribe argued that federal law recognizes the tribe’s reserved right to groundwater, and that the tribe also holds aboriginal title to the land in the Coachella Valley to which groundwater rights attach. The U.S. government’s motion echoes that of the tribe’s, emphasizing the supremacy of federal water rights over those created by state law. However, the government does not support the tribe’s claim of aboriginal ownership.

Conversely, the Coachella Valley Water District argued that Congress extinguished the tribe’s aboriginal groundwater rights, and that Winters rights impliedly reserved for the tribe do not extend to groundwater, and that even if they extend to groundwater, the purposes of the Agua Caliente tribe’s reservation will not entirely fail without a reserved right to groundwater. The Desert Water Agency’s motion mirrored that of the water district’s, contending that the tribe has no federal reserved right in groundwater, and the tribe’s aboriginal water rights claim was extinguished by statute long ago.

District Court Says Tribe Has Federal Reserved Right to Groundwater

On the parties’ cross-motions for summary judgment, the California district court ruled that the Agua Caliente tribe has a federally reserved water right in the groundwater underlying their reservation pursuant to the Winters doctrine. However, the district court determined that the tribe’s claim to an aboriginal groundwater right failed, explaining that “[t]he Act of 1851 extinguished the Tribe’s aboriginal occupancy right, and even if the Tribe re-established such a right it was not continuous and exclusive and continuous once the United States created the Agua Caliente’s reservation.” As a result, the district court said the tribe could not assert an “original occupancy right,” so defendants were entitled to summary judgment on the aboriginal issue. Following the district court’s decision, the defendant filed a petition for permission to immediately appeal the court’s summary judgment decision to the Ninth Circuit.

Winters Doctrine Front and Center on Appeal

On appeal, the key question will be the Court’s interpretation of the Winters doctrine. Under the Winters doctrine, when the federal government sets aside lands for a reservation, it impliedly reserves sufficient water to fulfill the purposes of the reservation. Even still, the Winters case involved only questions related to rights to surface water in rivers and streams, and does not even address federal reserved rights to groundwater.

Despite Lack of Clarity in the Law, Tribes have Successfully Negotiated Rights to Groundwater

While the state court decisions fall on both sides of the groundwater issue, several tribes have been able to secure reserved rights to groundwater through water settlements. In fact, of the nearly 30 water settlements that were enacted between 1978 and 2010, approximately one-half contain some provisions addressing rights to groundwater for tribes; though there has been little uniformity in the groundwater provisions of these water rights settlements. For example, some of these settlements specified a quantity of groundwater for use or set a limit on tribal pumping of groundwater, while other settlements provided tribal communities with the express right to use groundwater beneath their lands. But will these settlements have any impact on the Ninth Circuit’s decision?

Water District Argues Tribe Does Not Impliedly Exist

In its appellate brief, the water district argues that the U.S. Supreme Court has narrowly construed the reserved right doctrine because the doctrine conflicts with Congress’s policy of deference to state water law. The water district says that, under this narrow construction, the tribe’s claimed reserved right in groundwater fails. The water district claims that the tribe’s “claimed reserved right is not necessary to accomplish the primary reservation purposes and prevent these purposes from being ‘entirely defeated,’ and thus does not impliedly exist” under the Supreme Court’s narrow construction of the reserved right doctrine.

Agua Caliente Tribe Argues Government May Reserve Groundwater

In response, the Agua Caliente tribe asserts that “[a] federal reservation of land impliedly includes the reservation of water necessary to accomplish the purposes of the reservation,” and that “[a] Winters right is a fully vested and perfected federal property right in reserved water that exists from the date of a reservation’s establishment.” The tribe says the district court correctly concluded “like every other court that has considered a similar question, that water is necessary to accomplish the purposes of the Agua Caliente Reservation.” Similarly, the tribe claimed the district court also correctly concluded that the Winters doctrine applies to groundwater, and that the Ninth Circuit held more than forty years held that “the United States may reserve not only surface water, but also underground water.”

U.S. Government and Amici Lend Support to Tribe’s Arguments

Ninth Circuit’s Decision Could Have Lasting Impact on Western Water Law

All eyes will be fixed on the Ninth Circuit regarding its decision in the Agua Caliente case because it may have a significant impact on Western water law, including a number of settlements between other water conservancy districts and various Indian tribes. If the Ninth Circuit upholds the District Court’s determination of federal reserved rights to groundwater for the Agua Caliente Tribe, the case will likely go back to the District Court to determine the limits of the reserved groundwater rights and how to quantify those rights.

In a recent case before the Utah Court of Appeals, neighboring landowners went to battle over the purported obstruction and interference of an existing water right. In Clearwater Farms, LLC v. Giles, The appellant (“Clearwater”) contended that the lower district court erred when it rejected the appellant’s claims for damages “on the basis that [the appellee (“Gileses”)] did not cause and interference or obstruction of [the appellant’s] water rights.” However, the court of appeals disagreed, agreeing with the district court that the appellee’s actions, including failing to cooperate with the appellant, calling the Sheriff, and posting no trespassing signs, did not constitute an obstruction under Utah law.

Clearwater and Gileses as Adjacent Landowners

Clearwater and the Gileses are adjacent landowners in an unincorporated part of Utah County near Lake Shore. In 1996, the Gileses purchased their parcel of farmland adjacent to the Clearwater property. Two years later, an individual named Morley, Clearwater’s predecessor, purchased a twenty-one acre parcel of farmland directly to the north of the Gileses’ property. The next year, the Gileses subdivided their property into two separate building lots, which the Giles built a house on each of the subdivided lots. As a condition of the subdivision approval, the Gileses were required to improve a segment of a farm lane road that cut across the Gileses land and dead-ended on Clearwater’s property.

Gileses Agree to Allow Morley to Build Pump House to Irrigate his Property

At one time, an irrigation ditch, referred to as the Morley ditch, ran along the west side of the farm lane. Before the Gileses purchased their property, the ditch provided irrigation to the Morley property. However, due to flooding of the Spanish Fork river and a subsequent rise in the farmland’s elevation on account of growing silt deposits, it became impossible to properly irrigate the Morley property from the ditch. As a result of the rising elevation on the Morley property, the Gileses agreed to allow Morley to construct a pump house along-side the farm lane. The pump house was to house an electric pump, which was attached to a six-inch pipe that would allow Morley to adequately irrigate his property.

Morley Uses Pump House Until 2003, Then Cuts Pipe and Leaves in Ditch

After agreeing to the pump house, Morley buried a six-inch pipe in the irrigation ditch, leaving only a swale to identify the pipe’s location. Morley used the pump house to irrigate his property until 2003 when he decided that the cost of running the pump made its continued use impracticable. In 2009, Morley cut the six-inch pipe and left it lying in the ditch, and then built an entirely new pump house on his property, complete with a diesel pump to transport water from a diversion point further north on the Spanish Fork River at a cheaper cost. The following year, Clearwater purchased the property from Morley, as well as several other parcels of land adjacent to the Gileses’ property in order to construct a few homes.

In 2011, the neighboring landowners ran into trouble when Clearwater sought to remove the six-inch pipe from the Morley ditch and replace it with a fort-two-inch pipe. According to the facts recounted by the court of appeals, the Gileses were not cooperative in Clearwater’s efforts to replace the six-inch pipe. In fact, when Clearwater took the initial steps to install the larger pipe, the Gileses called local law enforcement to their property to stop any efforts to install the larger pipe.

Ultimately, the parties came to an agreement in April 2012, which agreement provided Clearwater with an easement across the Gileses’ property for utilities and water. Even still, Clearwater claimed that, because of the delay in reaching the agreement, Clearwater was unable to irrigate its property for the 2011 growing season. Eventually, Clearwater filed the instant suit to, among other things, recover “damages for lost crop revenue that allegedly resulted from the Gileses’ interference with, and obstruction of, Clearwater’s rights to transport water through the Morley ditch during the 2011 growing season.”

Clearwater’s Damages Claim Rejected

Following a bench trial, the lower district court rejected Clearwater’s damage claim, “conclude[ing] that Clearwater was not entitled to damages for lost crop revenue, because the Gileses had not obstructed Clearwater’s water rights.” Clearwater subsequently appealed.

Clearwater Argues That District court Erred in Rejecting Its Damages Claim

On appeal, Clearwater claimed that “the district erred in not awarding damages against the Gileses ‘for obstructing and restricting Clearwater’s ability to improve [its] existing water easement.’” Clearwater argued to the court of appeals that “it lost crop revenue because of the Gileses’ obstruction and interference.” Clearwater premised its claim for damages on two Utah statutes, Utah Code Ann. §§ 73-1-15 (prohibition against obstructing a watercourse) and 73-1-7 (allows for expansion of existing canals and ditches). Clearwater asserted that § 73-1-7 “creat[ed] its own cause of action,” which Clearwater said is “independent” of § 73-1-15.

Clearwater’s Three Theories of Obstruction

Before delving into whether the district court erred, the court of appeals recounted the facts surrounding the dispute over the ditch. The court of appeals explained that, when Clearwater first approached the Gileses about installing the larger pipe in the ditch, the Gileses objected, stating that there “would [be] no cooperation.” Even over the Gileses’ objection, Clearwater decided to move forward with their plans to install the larger pipe in the ditch. At some point, the contractor hired by Clearwater to perform a gas line probe parked a track hoe in front of the abandoned pump house. Upon a mistaken belief that the track hoe belonged to Clearwater, the Gileses called the sheriff.

After arriving at the abandoned pump house, the sheriff stated that, in his opinion, the larger pipe should not be installed until after the dispute had been resolved. As a result, upon the sheriff’s suggestion, the Gileses placed several no trespassing signs on the pump house and “told Clearwater not to enter the pump house or make any improvements to the water delivery system.” In response, Clearwater sought to obtain a TRO, which would allow Clearwater to proceed with the pipe installation. But Clearwater never followed through with the “restraining order petition, because, according to Clearwater, the assigned judge was unavailable at the time.” Clearwater never gave an explanation why they did not seek to have their petition for a TRO heard by a different judge.

Gileses’ Conduct Not an Obstruction

As it relates to § 73-1-15, Clearwater “argue[d] that the district court erred in rejecting its claim for damages under Utah Code section 73-1-15 on the basis that the Gileses did not cause an interference or obstruction of Clearwater’s water rights.” Section 73-1-15 reads in pertinent part:

Whenever any person has a right-of-way of any established type or title for any canal or other watercourse it shall be unlawful for any person to place or maintain in place any obstruction, or change of the water flow by fence or otherwise, along or across or in such canal or watercourse, except as where said watercourse inflicts damage to private property, without first receiving written permission for the change and providing gates sufficient for the passage of the owner or owners of such canal or watercourse. That the vested rights in the established canals and watercourse shall be protected against all encroachments. That indemnifying agreements may be entered as may be just and proper by governmental agencies.

Under the language of the statute, Clearwater argued that § 73-1-15 “provides that ‘watercourse[s] shall be protected against all encroachments,’ and that ‘maintain[ing] in place any obstruction’ is a violation of the statute.” Furthermore, Clearwater, in quoting the section liability provision, set forth that “a person who violated this section ‘is liable for damages or other relief and costs in a civil action to any person injured by that act.’” Clearwater asserted that the Gileses’ lack of cooperation, call to the sheriff, and posting of no trespassing signs constituted an obstruction under the statute.

At the outset of its discussion over the alleged obstruction, the court of appeals noted that Clearwater had acknowledged that the Gileses “never physically prevented Clearwater from digging a ditch or installing a pipe, and that the Gileses only verbally told Clearwater they would resist, would not allow the installation and would not cooperate.” The district court found that the Gileses’ resistance was made up of a call to the Sheriff, and that, at no time, did the Gileses take the law into their own hands. The district court concluded, “Simply put, [the Gileses] never placed any physical obstruction or changed the water flow along any ditch. There was no water flowing in a ditch to be interfered with.”

Trujillo v. Jenkins Explains What Constitutes an Obstruction Under the Statute

Relying in part on the Utah Supreme Court’s decision in Trujillo v. Jenkins, the court of appeals agreed with the lower district court that the Gileses’ actions did not amount to an obstruction under the statute. In Trujillo, the supreme court was faced with the question of whether the owners of an irrigation ditch would be subject to criminal liability for constructing a fence alongside the ditch. In explaining the meaning of § 73-1-15, the supreme court stated:

Section 73-1-15 prohibits changing the water flow or placing an obstruction along a ditch. Fencing a ditch would not necessarily violate either prohibition. First, placing a fence along a ditch would not change the ditch’s water flow. Second, fencing a ditch would not necessarily obstruct the ditch. To obstruct means to block or close up by an obstacle . . . to hinder from passage, action, or operation.

Thus, according to the supreme court, obstruction under the statute meant either a change in the ditch’s water flow or to block or close off the ditch, hindering the water’s passage through the ditch. According to the court of appeals, “Both of [the supreme court’s] meanings imply the use of some type of a physical barrier that is actually placed in the ditch and that is in contact with the water thereby changing its flow.”

Lack of Cooperation, Calling the Sheriff, and Posting No Trespassing Signs Not an Obstruction

In the instant case, the court of appeals could not conclude that the Gileses’ actions in any way constituted an obstruction as explained in Trujillo. As explained by the court of appeals:

Regarding the phone call to the sheriff, we cannot see how this action alone would “place or maintain in place any obstruction, or change of the water flow . . . along or across” the ditch. Further, the Gileses’ phone call to the sheriff and his subsequent arrival did not “change the ditch’s water flow” or “block or close up by an obstacle . . . to hinder from passage.” The Gileses merely asserted their belief that Clearwater had no right to expand the size of the pipe in the Morley ditch from six inches to forty-two inches. And although this position was contrary to Clearwater’s assertion that it could freely exercise its water rights by expanding the circumference of the pipe, the Gileses’ recourse to the sheriff (who simply voiced his opinion that the larger pipe should not be installed until the parties’ dispute was resolved), and their installation of no-trespassing signs, may have raised a legal quandary for Clearwater, but those actions do not amount to an obstruction under the statute. In effect, the Gileses’ actions seem more like the mere assertion of a contrary legal position. And neither the sheriff’s opinion nor the signs “block or stop up” or “close up or close off” the waterway. Nor did they change the waterway’s course or impede Clearwater’s access to it.”

Clearwater’s Section 73-1-7 Arguments Suffer From the Same Defects

Turning to Clearwater’s damages theory under § 73-1-7, the court of appeals determined that Clearwater’s claim under that section of the Utah Code “suffer[ed] from similar defects and our prior reasoning is equally applicable. Clearwater argued that § 73-1-7, which allows for expansion of existing canals and ditches, “gave it the affirmative right to replace the six-inch pipe with a forty-two-inch pipe.” However, in the view of the court of appeals:

But what Clearwater has not done on appeal is demonstrate how the Gileses’ actions—refusing to cooperate, calling law enforcement, or posting a “no trespassing” sign on the pump house—impeded it in some way from exercising “the right to use or enlarge [a] canal or ditch already constructed.” As previously discussed, the Gileses merely asserted their belief that Clearwater had no right to expand the existing pipe in the Morley ditch to forty-two inches. Although the Gileses’ position was contrary to Clearwater’s, the simple assertion of a position that is at odds with Clearwater’s did not stop Clearwater from asserting and exercising its rights. Certainly Clearwater could have moved forward and exercised what it believed it had the right to do, i.e., enlarge the six-inch pipe to forty-two inches. But as previously discussed, Clearwater was faced with a risk-benefit calculation. And Clearwater has not persuaded us that the actions taken by the Gileses impeded it from exercising what it claims to be its right to enlarge the six-inch pipe in the Morley ditch. Therefore, we affirm the district court’s ruling.

Only Actual Obstructions Count Under the Statute

The major takeaway from the Clearwater decision is that, in order to amount to an obstruction under the statute, there must be an actual obstruction, i.e. one which restricts the flow of water or changes its flow in some way, and not just a perceived obstruction. Or, in other words, mere lack of cooperation, contacting law enforcement, and/or posting no trespassing signs, that does nothing to change the flow of the water, or in some way impedes the water’ flow, will not amount to an obstruction. As the court of appeals aptly pointed, if Clearwater truly wanted to install the larger pipe, then they should have followed through on their attempt to obtain a TRO. Because they did not, they were left in the unenviable position of arguing to the court of appeals that words and/or veiled threats amounted to an obstruction. That they could not do.

In late August, the Utah Quality Growth Commission served as the latest forum for the seemingly never-ending debate between Salt Lake City water officials and private landowners over watershed management issues. Private landowners have continually claimed that Salt Lake City’s “over-zealous” watershed protection has severely limited the landowners’ ability to develop their property in the Cottonwood canyons.

Utah Quality Growth Act of 1999

In 1999, the Utah Legislature passed the Quality of Growth Act. The Act was intended to address the myriad issues created by the “rapid growth of population and housing in Utah, particularly within the grater Wasatch area.” As a result, the Act was aimed at “create[ing] new opportunities for local governments seeking to preserve open lands.” According to the Legislature, “The Act supports critical land conservation, home ownership, housing availability, efficient development of infrastructure and efficient use of land. The act applies to cities and counties on a purely voluntary basis, and mandates nothing.”

Utah Quality Growth Commission Membership

As part of the Act, the Legislature created the Utah Quality Growth Commission, which consists of approximately 13 members that are appointed by Governor and approved by the Utah Senate. Membership of the Commission consists of:

1) two persons at the state government level, one of whom must be from the Department of Natural Resources; 2) six elected officials at the local level, three of whom must be nominated by the Utah Association of Counties and three of whom must be nominated by the Utah League of Cities and Towns; 3) one person nominated by the Utah Home Builders Association; 4) one person nominated by the Utah Association of Realtors; 5) two persons from the agricultural community, nominated by Utah farm organizations; and 6) one person selected from the private profit or nonprofit sector. Commission members are appointed to four-year terms, with a limit of two consecutive terms of service.

Utah Quality Growth Commission Authority

1) make recommendations to the Legislature on how to define more specifically quality growth areas within the general guidelines provided to the commission by the Legislature; 2) advise the Legislature on growth management issues; 3) make recommendations to the Legislature on refinements to this chapter; 4) conduct a review in 2002 and each year thereafter to determine progress statewide on accomplishing the purposes of this chapter, and give a report of each review to the Political Subdivisions Interim Committee of the Legislature by November 30 of the year of review; 5) administer the program in this chapter; 6) assist as many local entities as possible, at their request, to identify principles of growth that the local entity may consider implementing to help achieve the highest possible quality of growth for that entity; and 7) fulfill other responsibilities and duties imposed by the Legislature or this chapter.

The Utah Quality Growth Commission is also responsible for administering the Utah’s LeRay McAllister Critical Land Conservation Fund, the funding of which “shall be used for preserving or restoring open land and agricultural land.” The Commission’s board is overseen by Chairman David Mansell, a real estate agent, and Logan City Councilwoman Holly Daines.

Utah Quality Growth Commission Takes Up Watershed Issue

Pursuant to its authority under the Quality Growth Act, the Utah Quality Growth Commission has purportedly taken up the watershed issue in anticipation that the Utah Legislature may seek input from the Commission during its next session if the Legislature decides to revisit Salt Lake City’s authority over canyon lands outside the city’s boundaries. As set forth by the Commission:

Water is the lifeblood for Utah’s economy and quality of life. Without water, this growth is impossible. Because we are growing so fast, we must become better stewards of our limited water resources. For this reason, The Commission recently undertook an effort to evaluate how the watersheds in Utah are managed and in particular, the granting and application of Extra Territorial Jurisdiction by the state to Cities of the First Class (A City whose population exceeds 100,000) and other issues.

Save Our Canyons Takes Issue With Commission’s Involvement

However, the Utah Quality Growth Commission’s voluntary involvement in the watershed management battle has not necessarily been well-received. An email from Save Our Canyons to its members, titled “Attack on the Watershed,” asked the members to turn out against “a little known state organization struggling for funding and battling to remain relevant [that] is taking aim at Salt Lake City’s watershed protections.”

Others opposed to the Utah Quality Growth Commission’s involvement in the watershed management issues have accused Commission staffer John Bennett of being the pocket of developers. In a memo to the other members of the Commission, Bennett said that even though he had “been accused of being in the pocket of developers,” he believed the commission was justified in speaking up because of its “responsibility to look at how to promote growth on a quality basis and how to conserve lands.”

“The reason I was willing to go down this path is that this commission is uniquely charged at looking at the tension between conservation and development,” Bennett added.

At the heart of the watershed issue is an “extra-territorial” agreement between Salt Lake City and the Utah legislature, which Bennett said during the recent Commission meeting, effectively gives Salt Lake City veto power over land-use decisions in the Cottonwood canyons, even though those canyons are outside the city’s boundaries. Bennett added that frustration has grown on the part of communities such as Sandy and Millcreek, who are currently looking for ways to annex parts of the canyons and ski resorts.

“The issue is: How do we resolve this tension between people who want to recreate and protecting the watershed? Those two things are both critical, and we need to figure out a way to achieve that,” Bennett said.

Salt Lake City Criticizes Commission’s Statements Made During Commission Meeting

However, not everyone agreed with Bennett’s characterization of things during the meeting. For example, Laura Briefer, director of Salt Lake City’s public utilities department, took issue with what she said were “many” inaccurate statements made by Bennett, as well as others, at the meeting. Among those inaccurate statements, Briefer said, was the “implication that it’s a relationship of conflict” between Salt Lake City and other communities. Briefer also said Bennett and others improperly implied that Salt Lake City does not invest in the Cottonwood canyons’ infrastructure. Above all, Briefer said she was “frustrated” by what she heard from the Commission during the meeting.

Opponents of Salt Lake City’s Control Over the Watershed Accuse City of Having Monopoly on Water

Those opposed to Salt Lake City’s control over the canyons, said they felt like Salt Lake City was holding a monopoly on water, and that it was unfair to subject Salt Lake County residents to ordinances or other regulations put in place by an elected body the residents did not vote for. For example, Kyle Buxton, a landowner and irrigation company supervisor in Big Cottonwood Canyon, said during the meeting that he and his family have been personally cited 38 times over watershed issues in just the past three years.

In addition to Buxton, canyon property owners Evan Johnson and Norm Henderson, irrigation company president Paul Southam and Dave Robinson, a negotiator for several property owners and Republican candidate for Salt Lake County mayor, laid out a litany of complaints about how city water officials unfairly stymied their ability to use their lands.

Evan Johnson, an owner of a ski-in/ski-out lot near Cecret Lake, told the Commission that Salt Lake city had cut-off his access to water and devalued his property. “The watershed regulation is abused and we’re bullied,” Johnson said. “ My property is inside four water districts, and I can’t get a drop of water. I can’t get any water because Salt Lake City told them not to service me.”

Salt Lake City Fires Back at Landowners

In response to the landowners’ complaints, Salt Lake City Councilwoman Erin Mendenhall said, “It feels like some sour grapes over decisions you didn’t like in the Mountain Accord process and failed litigation efforts,” and the Utah Quality Growth Commission had provided the landowners “a place to have a pulpit.”

Commission Adjourns Hearing Without Deciding on Any Formal Recommendations

Following the contentious debate between canyon landowners and Salt Lake City officials, the Commission, which has no regulatory power, adjourned the meeting without deciding on any formal recommendations. Even still, Briefer was not too excited about one of the recommendations the Commission said it might consider: eliminating Salt Lake City’s extra-territorial jurisdiction entirely and turn over water management authority to counties.

“This is the first time I’ve ever seen this recommendation,” said Briefer, who added that she has concerns about counties’ ability to manage critical water resources. Still, she added, Salt Lake City’s public utilities department is “happy to listen.”

Commission Issues Draft Report

In a blog post, the Utah Quality Growth Commission states that it “has spent the last couple of months reviewing the management of [U]tah watersheds and related issues. Most of our work has focused on the management of the Wasatch Canyon Watersheds.” As part of those efforts, the Commission has produced a draft report to the Legislature.

Who Will Ultimately Control the Watershed?

While it remains to be seen what, if anything, the Utah Quality Growth Commission will recommend to the Legislature regarding the battle between Salt Lake City and canyon landowners over watershed management, the Commission has placed itself firmly in the middle of the fray between the parties. It will be interesting to see what role the Commission plays in the upcoming legislative session if the Legislature takes of the watershed issue. Without any formal regulatory authority, the Commission will likely serve as a consultant for the Legislature, who will ultimately decide if control of the watershed will remain in the hands of Salt Lake City, or if it will be left to the individual counties or other municipalities.

In January 2015, United Effort Plan trust (“UEP”) filed suit against Twin City Water Works (“TCWW”), alleging that for a number of years TCWW has unlawfully pumped water from UEP land without compensating UEP. Additionally, UEP claimed that the utility was funneling revenues generated from Hildale and Colorado City residents to FLDS leaders and TCWW employees, while at the same time charging residents unreasonably high rates (i.e., $12,000 impact fee for a water meter) and providing little or no benefit to residents in return.

UEP Taken Over by State Amid Concerns About FLDS Trying to Bankrupt UEP

The UEP was formed decades ago by FLDS church leaders seeking to manage residents’ “consecrated” properties under a communal system, but Utah’s court system took over the management of the UEP a decade ago amid concerns that FLDS leaders were defaulting on their responsibility to defend trust members’ holdings and driving the trust toward insolvency. The state’s management of the UEP trust created a situation where FLDS members have been pitted against the trust they had established in an ongoing adversarial relationship.

UEP’s Lawsuit Seeks Control of Water Distributed From UEP Land

UEP’s lawsuit seeks control of the water distributed from UEP owned land, as well as back payment for water taken from the land without compensation to UEP. It has been alleged that TCWW earned and disbursed more than $4.3 million between 2002 and 2009, none of which was paid to UEP, and that $1.7 million of that was diverted for purposes wholly unrelated to TCWW. UEP also seeks to have the court put in place a new system of water distribution management to ensure that TCWW is not allowed to take water from UEP land without providing compensation in the future.

Judge Westfall Takes Question of Who Should Control Short Creek Water Rights Under Advisement

The question of who will control the water rights in the Short Creek area is now in the hands of Fifth District Judge G. Michael Westfall. Late last month, after accepting an agreement between TCWW and UEP, which resolved a number of the issues regarding water rights in the border towns of Hildale and Colorado City, Judge Westfall took under advisement arguments over who has the right to control the water in the neighboring municipalities.

Over the objection of TCWW, Judge Westfall agreed with UEP, ruling that the Fifth District had jurisdictional authority to decide who has control over the water on the Arizona side of the border. TCWW had argued to Judge Westfall that a Mohave County (Arizona) court should decide the issue, but Judge Westfall disagreed. As a result, for now, the fate of the water on the Arizona side of the border lies in the hands of a Utah judge.

UEP Argues Its Ownership of the Land Gives it Right to Control Water

In support of its argument that it is entitled to control the water between Hildale and Colorado City, UEP attorney, William Walker, argued that, on account of the fact that UEP owns the land, the law gives UEP sole control over collecting underground water through a “right of fiduciary” and to control surface water via existing property rights.

TCWW Compares Easement to Hunting Permits

In response, James Spendlove, the attorney for the TCWW utility, compared access to underground water to a hunting permit, arguing that, so long as an individual has a permit to hunt animals and is allowed to be on the land, then that person has the right to kill and take the animal and benefit from the meat without having to give the meat back. Spendlove told the court that UEP granted TCWW an easement some forty years ago to allow TCWW to place its well equipment on UEP’s land and draw water from the ground under the land. Spendlove also noted that TCWW has an Arizona permit for it well operations.

UEP Says Easement Granted Access Only

UEP replied that the easement granted to TCWW gave the utility access to the water, but it did not vest any control over the water rights in TCWW. According to UEP, such rights would have to be conveyed in a separate document, and that TCWW rejected the idea of easement rights to the water, alleging that TCWW had the right to take the water by way of “unrecorded leases.” TCWW has been unable to produce these alleged “unrecorded leases,” UEP told the court.

UEP’s Suit One of Many Legal Woes for TCWW

Judge Westfall has not given a timetable for his decision. Even still, the battle over the water rights in Hildale and Colorado City is not the only legal trouble the TCWW has had to face over the last year or so.

Utah AG’s Office Sues TCWW Over Illicit Funding of FLDS Church

In March 2015, the Utah Attorney General’s Office filed a lawsuit against TCWW, which asked Washington County, Utah’s Fifth District Court to close down the utility. The lawsuit was filed as part of the efforts to disrupt the allegedly illicit funding of the FLDS church. According to the complaint: “The officers of (Twin City Water Works) are not properly discharging their duties, have no knowledge of the operations of the nonprofit corporation, and appear incapable of ensuring that the nonprofit properly uses its revenue to improve, maintain, and expand the TCWW water system.”

“The TCWW water system is in very poor condition, and it appears that little revenue, if any, has been used for the maintenance, expansion, or development of the TCWW water delivery system,” the attorney general’s complaint summarizes.

Willie Jessop Sues TCWW Seeking to Tie Utility to FLDS Church

Just one month later, Hildale businessman and former security representative for the FLDS church, Willie Jessop, filed his own suit against TCWW, seeking to tie the utility to the FLDS church, which owes Jessop approximately $30 million dollars by way of a default judgment entered against the church in 2012.

TCWW Pleads Guilty to Tax Evasion

The TCWW utility also pleaded guilty to tax evasion last year, acknowledging it had failed to pay corporate tax on income of $112,634 per year between 1996 and 2013. The plea agreement stated the company owed $147,624.61 in back taxes, plus another $223,000 in interest and penalties.

No Water Without Compensation

While it remains to be seen what Judge Westfall will decide as it relates to water rights in the Short Creek Area, it is clear that the UEP wants a new system put in place to ensure TCWW cannot remove water from UEP land without compensating UEP. Like others suing the utility, UEP appears increasingly concerned that revenues generated by TCWW are neither being paid to UEP nor are being used to maintain the TCWW water system. Instead, those funds appear to be lining the pockets of FLDS leaders and TCWW employees.

Hildale/Colorado City Residents Real Losers in Water Rights Dispute

Beyond UEP, the big losers in the battle over water rights in the Short Creek area are the residents in Hildale and Colorado City that are being victimized via unreasonably high rates charged by TCWW. Hildale instituted a steep hike in impact fees for water services in March 2015. UEP employees said the hike in impact fees frustrated efforts to sell some vacant lots without water and sewer at an auction earlier in the month.

Another issue affecting the auction was the cost of constructing an 8-inch water main to some of the properties. “The city is telling them these lots will not be served until we get an 8-inch main to serve the entire area because we can’t just take 1-inch, 2-inch lines off of a 1-inch, 2-inch line,” UEP employee Jethro Barlow said. UEP attorney Jeff Barlow said a problem with the requirement is Hildale is asking each resident to pay for the entire stretch of pipe to their property, so at $25,000 per block, a resident four blocks from the access point would pay $100,000. So would any other residents within the 4-block area, he said.

Last week, utahwaterlaw.com reported on the Utah Court of Appeal’s recent decision in HEAL Utah v. Kane County Water Conservancy District, which upheld the approval of two change applications that will provide much-needed water for the Green River nuclear power plant project.

HEAL Utah Decides Not to Appeal to Utah Supreme Court

Following the court of appeal’s decision, HEAL Utah said it would review the court’s ruling before deciding whether to appeal to the Utah Supreme Court. However, on Wednesday, HEAL Utah and the other principal environmental groups involved in the lawsuit, Uranium Watch and Living Rivers, announced “they are dropping the legal challenge to the project’s water rights.”

HEAL Utah and Other Groups Maintain Nuclear Project is “Struggling”

While the HEAL Utah and the other environmental groups have dropped their legal challenge to the Green River nuclear project, the groups maintain that “all facts available show the project is struggling, having attracted very little investment from utilities.” More specifically, HEAL Utah has said that “[d]ropping their legal appeal will likely hasten the project’s demise, because Blue Castle Holdings, the company behind the troubled, nearly-decade-old reactor plan, will now have to make large cash payments to southern Utah water districts.”

“By dropping the appeal we are actually forcing them to put up or shut up as they sometimes say,” HEAL Executive Director Matt Pacenza told reporters outside Matheson Courthouse in Salt Lake City. “We don’t think they can.”

“Blue Castle may be winning in the courts, but they’re losing everywhere else. When no one wants to invest in your company and no utility wants to buy your power, you’re in deep trouble,” Pacenza said. “Everything we have learned over the last nine years is that this is a project that has not gotten off the ground.”

Similarly, Sarah Fields, program director of Moab-based Uranium Watch reiterated that the Blue Castle nuclear power plant project has “never been a viable project. The Court of Appeals decision does not change that.”

“None of the utilities in Utah and the surrounding states have agreed to join the project at any level,” Fields said. “There is no realistic source of funding to construct nuclear reactors in Utah.”

Fields also pointed out that although Blue Castle is purportedly putting together a permit application, the company has not had contact with the Nuclear Regulatory Commission since 2011. Furthermore, Fields, like Pacenza, questions whether Blue Castle will be able to make the hefty payments to the Kane and San Juan County Water Conservancy Districts, which start at $180,000 per year for the first five years, and then increase to $580,000 a year after the nuclear reactor comes online. Given Blue Castle’s inability to raise funding from outside sources, just over $500,000 since 2007, Fields and Pacenza may very well be right about Blue Castle’s inability to pay for the needed water.

Living Rivers Says Water Availability is Still an Issue for the Project

Echoing Pacenza and Fields, John Weisheit of Living Rivers added water availability also remains a huge issue for Blue Castle. “The project is a non-starter for one very important reason: There isn’t enough water available from the Colorado River. The demand for water by the seven states of this basin exceeds the natural supply.”

Weisheit also said that the effects of climate change may further plague Blue Castle in its attempt to complete its nuclear project. “Increasing aridity is becoming a major cause of depletion,” he said. “Over the last 16 years the average decrease in the natural flow has been 20 percent, or 3 million acre-feet.”

Blue Castle Holdings Fires Back Over Claims of Financial Struggles

The Green River nuclear power plant project is the brainchild of former Utah County Republican lawmaker Aaron Tilton, who is the president and CEO of Blue Castle Holdings. Following the Utah Court of Appeals’ decision, Tilton said in a news release:

The original approval by the State Water Engineer has now stood the test of an appeal where the relevant evidence was weighed. The ruling is a major de-risking milestone for the Blue Castle Project. It provides future utility participants greater certainty that the major asset, water for the deployment of a new nuclear plant, has been secured economically.

In response to the claims made by HEAL Utah and the other environmental groups regarding Blue Castle’s finances, Blue Castle attorney, David Wright said, “HEAL Utah is simply not privy to Blue Castle’s finances and does not know what Blue Castle has been doing, concerning its efforts in developing the project. Blue Castle has honored the terms of its leases with the two water conservancy districts and intends to continue to do so.”

Blue Castle Holdings Moving Forward to Select Builder of Power Plant

Last month, Blue Castle announced it was moving forward with the project and that it was beginning the process of selecting contractors to build the power plant. Blue Castle said its power plant will create between 2,200 and 3,000 megawatts of power, which will increase Utah’s ability to generate power by up to 50%, while consuming only 1% of its water diversions.

Time Will Tell if Power Plant Project will Come to Fruition

While the legal fight between HEAL Utah and Blue Castle Holdings may be over for now, time will tell whether the Green River nuclear power plant project will ultimately be a success. Aside from raising resources to continue to fund the project and pay for the water necessary to fuel the plant, climate change and states’ efforts to draw more water from the Colorado River may further impact the vitality of the project.

Prior Appropriation System Adopted in Utah

As part of its responsibility to the public over water in Utah, the State has adopted the “prior appropriation system—a capture system of water allocation—to maximize productive usage of water.” Through Utah’s prior appropriation system, those wishing “withdraw water from the natural environment” are required apply to the Utah State Engineer. In the application to the State Engineer, potential water users must include: “the nature of the proposed use,” the “quantity of water in acre-feet,” “the time during which it is to be used,” “the name of the stream or other source from which the water is to be diverted,” “the place on the stream or source where the water is to be diverted and the nature of the diverting works,” and any “other facts that clearly define the full purpose of the proposed appropriation.”

However, an appropriation by the State Engineer “may be made only for a useful and beneficial purpose.” Thus, the State Engineer “must ensure that the waters of the state are used by appropriators in accordance with their priorities and that diverted waters are used for proper beneficial purposes.”

Change Applications Under Utah Law

Once a potential user obtains the right to use unappropriated water, “a water right holder is entitled to change the point of diversion or the place or nature of use of water so long as vested rights are not impaired by the change.” In order to exercise the right to change the point of diversion or the place or nature of use of water, a water user must file a change application with the State Engineer. Under Utah law, the State Engineer is required to “follow the same procedures . . . for applications to appropriate water and applications for permanent changes of point of diversion, place of use, or purpose of use.” More specifically, the Utah Code “requires the State Engineer to approve a change application unless it impairs any vested [water] right without just compensation.”

Even still, the Utah Supreme Court has explained that water right owners have a vested right to the “quality as well as the quantity which he has beneficially used.” Thus, while there is a presumption in favor of approving change applications, the “State Engineer must first determine that the proposed changes will not impair any vested [water] right to the beneficial use of a certain quality and quantity of water.”

Even though the State Engineer is authorized to determine whether a change application should be approved, “a person aggrieved by the State Engineer’s decision may obtain judicial review in accordance with Title 63G, Chapter 4, Administrative Procedures Act.” As part of a district court’s review, the court “is not sitting in its capacity as an adjudicator of rights, but is merely charged with ensuring that the state engineer correctly performed an administrative task.” Furthermore, in its review of the State Engineer’s decision, a “district court may only consider issues ‚subject to determination by the [State] Engineer because the effect of the court’s judgment is the same as it would have been if the Engineer had reached the same conclusion in the first instance.” Thus, the district court “stands in the same position as the State Engineer,” and may only review those “issues determined by the State Engineer.”

Green River Power Plant Project’s Need for More Water

In HEAL, the Kane County Water Conservancy District and the San Juan County Water Conservancy District had for some time leased their existing water rights to Blue Castle Holdings Inc. “for the propose development of a nuclear power plant near” Green River, Utah. Because the proposed nuclear power plant project “will require the continuous depletion of nearly all of the Districts’ apportioned water to create steam to generate power and to cool the power plant,” The water conservancy districts and Blue Castle sought “to move the Districts’ approved points of diversion from several small tributaries to a single location on a larger river upstream from the existing points of diversion.”

The Change Applications at Issue

In January 2012, the State Engineer approved two change applications as it related to the existing water rights of the Kane County Water Conservancy District and the San Juan County Water Conservancy District. San Juan County Water Conservancy District’s change application “proposed to change the point of diversion from the smaller San Juan River to the Green River in Emery County, Utah.” San Juan County Water Conservancy District’s change application “also proposed that San Juan County Water Conservancy District’s water would be stored in a new reservoir and be used for the Project.”

Kane County Water Conservancy District’s change application proposed a change not only in the point of diversion, but also in the nature of the water use. Kane County Water Conservancy District “holds rights to 29,600 acrefeet of water from Wahweap Creek and Lake Powell in Kane County, Utah, for steam generation in the abandoned Kaiparowits Power Project.” In its change application, Kane County Water Conservancy District “proposed to use its water rights to aid in producing nuclear power for the [power plant] [p]roject,” and “[r]ather than diverting the water from Lake Powell, the Kane County Water Conservancy District proposed to divert the water from the same location proposed by the San Juan County Water Conservancy District in the Green River.”

HEAL Utah Challenges State Engineer’s Approval of Change Applications

Following the State Engineer’s advertisement of the Districts’ change applications, “nearly fifty protests were filed against the Kane County Water Conservancy District’s application and close to thirty protests [were filed] against the San Juan County Water Conservancy District’s application.” Even still, the State Engineer ultimately approved both change applications.

HEAL Utah, a Utah environmental protection group, sought judicial review of the State Engineer’s decision to approve the two change applications in district court. The two cases were consolidated, and a bench trial was held in September 2013. Following the bench trial, the district court ruled in favor of the Districts and Blue Castle, upholding the State Engineer’s decision to approve the change applications. HEAL Utah subsequently appealed.

HEAL Utah’s Three Challenges on Appeal

On appeal, HEAL Utah argued that the district court erred when it approved the change applications because the applicants had “not satisfied the burden of demonstrating the Change Applications meet the” necessary statutory requirements. Specifically, HEAL Utah argued that: “(1) there is no unappropriated water in the proposed source, (2) the proposed diversion will have an unreasonable impact on the natural stream environment and is contrary to the public welfare, and (3) the proposed change is not feasible and is speculative.”

Utah law sets forth that a change application should be approved if “there is reason to believe” that “there is unappropriated water in the proposed source,” “the proposed use will not impair existing rights or interfere with the more beneficial use of the water,” the proposed plan is “physically and economically feasible” and “would not prove detrimental to the public welfare,” and “the applicant has the financial ability to complete the proposed works.”

Utah Court of Appeals Rejects Contention that Green River is “Overapportioned”

In addressing HEAL Utah’s first contention, that there is no unappropriated water in the Green River and therefore the water rights upon which the change application is based do meet the requirements of Utah law. There, the court of appeals rejected HEAL Utah’s argument that the Green River is “overapportioned.” “HEAL Utah’s argument ignores the fact that the Green River and its tributaries form an interconnected system of which the Flaming Gorge Reservoir is only a part,” the court of appeals noted. “HEAL Utah’s evidence and experts were unable to demonstrate the extent of impact the diversions would have on the fish or the stream.”

HEAL Utah’s Briefing Deemed Inadequate on Several Points

Turning to HEAL Utah’s next contention, the court of appeals determined that “there is reason to believe the proposed changes will not unreasonably affect public welfare and the natural stream environment.” The court concluded that “HEAL Utah has failed to meet its burden of persuasion on appeal.” The court said that while “[m]ere probabilities and speculative evidence may be sufficient to challenge a change application … HEAL Utah has not actually challenged the district court’s factual findings … [and] cites no legal authority to support its arguments, and offers no references to the parts of the record on which it relies.” The court of appeals made similar statements in regards to certain of the other arguments raised by HEAL Utah.

Utah Court of Appeals Says, Although Project is a “Risky Venture,” the Applicants Presented Enough Evidence it was Both “Physically and Economically Feasible”

Finally, the court of appeals addressed HEAL Utah’s contention that “the proposed beneficial use of water—supplying a currently unbuilt nuclear power plant—is neither financially feasible nor anything more than a purely speculative use of water.” The court of appeals determined that “although the Project is a risky venture and has not yet been licensed through the Nuclear Regulatory Commission, the Applicants presented evidence that the Project is both physically and economically feasible.”

Similarly, the court rejected HEAL Utah’s argument that the power plant project is speculative or that the change applications attempt to create a monopoly over future water use. According to the court of appeals:

But here, there are contracts in place assigning the Districts’ current water rights to Blue Castle. Although Blue Castle does not intend to build the power plant without the assistance of other entities, the purpose and use of the water is clearly defined—it will be used for the generation of nuclear power. Unlike the applicants in Western Water, Blue Castle has proposed a site for the plant, invested money to develop the plant, and offered a detailed description of the purpose for the water and specific amount of water needed. This enormous risk and detailed plan for the nuclear plant demonstrates that Blue Castle’s interest in obtaining this water is not merely speculative.

HEAL Utah Will Review Ruling Before Deciding to Appeal Further

In a press release, Matt Pacenza, executive director of HEAL Utah, said the group is “disappointed” by the ruling, but still optimistic. “Utahns opposed to the project shouldn’t worry. This remains a project which has failed to attract investment or interest from any utility,” Pacenza said. “If no one wants to fund your project, or buy the product you’re selling, then you’re going nowhere.” HEAL Utah said it will review the court of appeals’ ruling before making and decision about whether to appeal to the Utah Supreme Court.

In its opinion, the court of appeals, noted several weak spots in HEAL Utah’s original filing, which may impact any further appeal. The court’s opinion sets forth that “[o]ur analysis of HEAL Utah’s arguments is limited because its arguments are often inadequately supported and briefed. In response, Pacenza has acknowledged that their appellate brief could have been stronger. “We developed some issues with our counsel late in the process,” he said. “We didn’t present as strong a case as we had hoped. But we still believed these critical issues should be heard by the court.”

Water Conservancy Districts and Blue Castle Rejoice in Victory

Conversely, the water conservancy districts and Blue Castle rejoiced in their victory. “”We have believed in this project since the beginning and yet another court has agreed with us,” said attorney David Wright, who defended the state engineer’s decision. “We are pleased with the outcome.” Blue Castle’s Aaron Tilton, a former Utah lawmaker, said the company is sifting through contractors and plans to begin site preparation work at Green River in about two years. “Our project has been scrutinized at many levels, including the state engineer, the district court and now the appeals court,” he said. “We have fully complied and satisfied all the requirements of the law and we can assure the public the level of scrutiny that has been applied to the process is welcomed.”

It appears that the Navajo Nation, the federal Bureau of Reclamation, and the State of Utah are closing in on a settlement over the Utah Navajo’s water rights to the San Juan River. While the settlement must still be approved by Congress, the aforementioned parties are all in agreement on a settlement they say is both fair and likely to calm uncertainty as it relates to the San Juan River, which is a major tributary of the Colorado River that covers some 383 miles in the Four Corners area. If approved, the Navajo Nation settlement will resolve one of the largest outstanding water rights claims in Utah.

Navajo Nation’s Water Rights Have Been Hard to Quantify Historically

The Navajo Nation was originally established via a treaty in 1868, which was long before many of the current users began drawing water from the region’s rivers. By law, the Navajo Nation theoretically holds senior water rights to most competing uses, according to the “first in time, first in right” principle. But for the Navajo Nation, as with many tribes, quantifying those rights has meant decades-long trudges through political negotiations and, sometimes, litigation.

The Navajo Nation Approves Settlement Over Water Rights, Allocating 81,500 Acre-Feet of Water Annually

In January 2016, lawmakers in the Navajo Nation approved the settlement by a vote of 13-7 without any debate. The approved settlement will give the Navajo 81,500 acre-feet of water annually, which the settlement allows the Navajo to draw from aquifers and the San Juan River and its tributaries. The Navajo could also potentially draw their share of water from Lake Powell, but the Navajo have said they have no interest to do so.

While the Utah Navajo currently use only a small portion of the 81,500 acre-feet of water that will be allocated to the tribe under the settlement, it has been reported that “the agreement will allow for economic development and leasing of water to entities off the reservation, and the tribe wouldn’t lose any water it did not put to use, according to the settlement.” Tribal President Russell Begaye has said, “We do not intend to only utilize the water for drinking or housing purposes. We would also like to see it benefit business startups, tribal offices, schools and other programs on the Navajo Nation.”

Husband and Wife Attorney Team Hired to Advise Navajo Nation Over Settlement

The Navajo Nation has hired Daniel Cordalis and his wife Amy Cordalis, both attorneys and members of the Navajo tribe, to advise the Navajo Nation as it relates to the settlement over the San Juan River. Mr. Cordalis has said, “That analysis led us to believe the settlement is fair and provides the Navajo Nation a favorable resolution of their Utah water rights claims.”

Congress to Allocate $200 Million for Navajo Nation Water Projects

In addition to the annual water allocated to the Navajo, the settlement calls for a Congressionally allocated, $200 million Utah Navajo Water Development Fund for Utah Navajo water projects. The settlement also includes a waiver of any past legal claims by the Navajo Nation against the State of Utah and the U.S. government within Utah, a provision that is standard operating procedure in Indian water settlements.

Is First in Time Really Last in Line?

A somewhat controversial part of the settlement contains an agreement by the Navajo Nation that, if there is not enough water to fill its needs, the Navajo Nation will not assert priority over pre-existing, non-Native water users. This provision of the settlement has purportedly raised some concerns in the water conservation community over the value of water rights conservationists say cannot be enforced. “It kind of tells me that the state of Utah understands that there’s no water left for the tribes,” said John Weisheit, conservation director for Living Rivers, a Utah-based water advocacy group. “They’re first in rights, but last in line for water.”

However, Mr. Cordalis has said that while water supplies from the Colorado River may be in doubt, that is not the case as it relates to the San Juan River. “The San Juan River is not burdened with downstream water rights such that those existing water rights present a significant detriment to Navajo’s 81,500 acre-feet a year (AFY) right,” he said. “In our opinion, there will be enough water in the San Juan River to achieve the full settlement value on a yearly basis.”

Grassroots Activists Feeling Left Out

Some grassroots activists have also complained that they have been left in the dark about the settlement’s terms, a concern that harkens back to 2012, when a massive outcry among Navajo activists led to the defeat of the Navajo-Hopi Little Colorado River Water Settlement Act of 2012.

“We want to be part of the decision-making, but we are not,” said Anna Frazier, a long-time activist with the Navajo grassroots group Diné CARE. Still, there has not been public opposition to the Utah San Juan settlement as there was to the Little Colorado proposal in 2012.

Indian Water Settlements Proving Costly for Federal Government

In addition to the Utah settlement, American Indian water rights settlements nationwide have cost the federal government $4.3 billion, the Interior Department has said. Congress enacted most of the 31 other settlements, while the others came about through federal agencies or court order. Four are pending in Congress for tribes in Montana, Oregon and California, according to the Interior Department.

Time Will Tell What Settlement Will Mean for Future of Navajo Nation and its Use of Water

While the Navajo settlement in Utah still needs the blessing of Congress, it appears that it may help with development and infrastructure within the tribe. “What the settlement does is provide that flexibility for tribal members to both use water now and have enough water for future development, which ultimately is most important,” Mr. Cordalis said. Similar to Mr. Cordalis, Leonard Tsosie, a Navajo Nation Council delegate, has promoted the settlement among his colleagues and constituents as a way to support existing and future Navajo communities in southeastern Utah. “We can dream all we want but if there is no water, there is no development,” he said.

Only time will tell whether the Navajo settlement will provide the necessary water the tribe needs to fulfill their visions for progress and expansion. Furthermore, demand on the Colorado and San Juan Rivers will only increase over time, which may mean that although the Navajo’s water rights are superior, they may be limited by the right of other non-Native users as set forth in the settlement. It would seem awkward that the Navajo Nation has been granted this water right, but other non-Native users may trump that right if there is not enough water to fulfill the Navajo’s allocation. In that case, first in right will be last in line.